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Israel’s Vital Tech Sector to Gain From Return of Army Reservists

Employees of StoreDot, an Israeli company that has developed extreme fast charging electric vehicle batteries, work in a laboratory in Herzliya, Israel, Oct. 2, 2023. Photo: REUTERS/Amir Cohen

Israel‘s wartime economy will get a much-awaited boost as the military gradually releases reservists fighting in the Gaza Strip so they can return to their jobs and jump-start softening growth.

Since the Oct. 7 attacks by the Palestinian terrorist group Hamas, more than 300,000 Israelis were drafted to reserve duty — many coming from the globally-important high-tech sector — leading to labor shortages and a gloomy national mood that hurt consumer spending and is expected to dent economic growth.

After nearly three months of intense air bombardment and a massive ground incursion, Israeli leaders have hinted that the war is entering a new phase, with a shift towards more targeted operations aimed at eliminating the Islamist group that rules Gaza and rescuing Israeli hostages.

The military accordingly is adjusting deployment plans for its forces in Gaza and other hot spots, first and foremost by starting to send reservists home — at least for a while.

It declined to share specifics about its number of forces, but said the move will “significantly alleviate economic burdens and enable them to gather strength for upcoming activities in the next year, as the fighting will persist, and their services will still be needed.”

Prior to the war, Israel was headed for solid economic growth of 3.4 percent in 2023 and 3 percent in 2024, according to the central bank. Now, the economy is headed for a fourth-quarter contraction and the Bank of Israel sees 2 percent growth this year and next, or zero growth per capita given Israel‘s fast-growing population.

Erel Margalit, who heads one of Israel‘s most active venture capital firms, Jerusalem Venture Partners (JVP), said the military made a calculated decision.

“They understand you need to go release people to go back to work because going back to work makes Israel stronger,” Margalit said. “Israel is not only strong militarily.”

START-UPS

With inflation easing, the Bank of Israel cut short-term borrowing rates by 25 basis points to 4.5 percent on Monday, its first reduction in nearly four years. The central bank’s policy makers are keeping an eye on the military’s strategy.

The release of reservists will benefit consumer spending, said deputy central bank chief Andrew Abir, which accounts for more than 50 percent of total economic activity.

“People were called up with no warning. In the first month, there was a real mess, because they were in the middle of projects,” Abir told Reuters, referring mainly to high-tech firms.

Spouses who may have been caring for their families alone since October will also be able to return fully to their employment, he said. This is good news for the high-tech sector, which accounts for 12 percent of employment, more than half of Israel‘s exports, 25 percent of income taxes, and nearly a fifth of its overall economic output.

Other signs of economic recovery in real-time data are emerging. Credit card purchases have returned to pre-war levels, Abir said, in “a sign the economy is functioning again.”

Foreign investment, while it has slowed, has not dried up. Startups raised $1.5 billion in the final three months of 2023 in 75 deals, according to data published last week. In 2023, funding fell to $7 billion from $16 billion in 2022.

Geopolitical risks may be off-putting, but they also offer a bigger potential upside, said JVP’s Margalit.

“There are some very good deals to be had,” he said.

Larger, well-funded tech firms have mostly weathered the war, and some have even thrived. Smaller companies, especially those that were hoping to close early financing rounds when the war broke out, have had a harder time.

In some cases, Margalit said, JVP and partner investors have had to inject more funds into these firms in order to “extend the runway.”

STATE SUPPORT

Pini Yakuel, CEO of marketing data firm Optimove, said they saw strong growth in the fourth-quarter despite having 41 of 240 workers in Tel Aviv drafted for reserve duty.

“We’ve adapted. It’s a new reality,” he said. “We just kind of, like, pressed on. Focused on what’s most important. Some things were paused, some things were delayed, but you continue to execute.”

His company put non-critical projects on hold and relied on offices abroad to help cover the load. And things will get easier as the absent employees slowly return.

“I notice in the office: ‘Oh hey, you’re back.’ ‘Yeah, I’m back.’ ‘Is it for good?’ ‘No, for the next month. Then they’re gonna tell us if we need to go back [to the reserves] or not’.”

The government took steps to protect the sector. State-funded Israel Innovation Authority set up a $100 million fund to help early stage startups.

In its recent survey, half of young companies only had sufficient funding for six months, said Dror Bin, the authority’s CEO. His fund has invested about $41 million so far.

“We all got our act together,” Bin said. “CEOs and employees realized that if they want to sustain the company’s success and their jobs they needed to refocus themselves on work.

“Despite all the empathy we get from the tech industry globally, at the end of the day when customers abroad need to get deliveries they can’t say that they didn’t get the deliveries because of the war in Israel,” he said.

($1 = 3.6437 shekels)

The post Israel’s Vital Tech Sector to Gain From Return of Army Reservists first appeared on Algemeiner.com.

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Putin Speaks to Trump, Condemns Israel’s Strikes on Iran, Kremlin Says

Russian President Vladimir Putin and Iranian President Masoud Pezeshkian meet in Moscow, Russia, Jan. 17, 2025. Photo: REUTERS/Evgenia Novozhenina

Russian President Vladimir Putin spoke to US President Donald Trump for 50 minutes on Saturday, condemning the Israeli military operation against Iran and expressing concern about the risks of escalation, the Kremlin said.

“Vladimir Putin condemned Israel’s military operation against Iran and expressed serious concern about a possible escalation of the conflict, which would have unpredictable consequences for the entire situation in the Middle East,” Kremlin aide Yuri Ushakov told reporters.

Trump, for his part, described events in the Middle East as “very alarming,” according to Ushakov. But the two leaders said they do not rule out a return to the negotiating track on Iran’s nuclear program, Ushakov said.

On Ukraine, Putin told the US leader that Russia was ready to continue negotiations with the Ukrainians after June 22, according to state news agency RIA.

Trump reiterated his interest in a speedy resolution to the conflict, the Kremlin aide said.

Putin also congratulated Trump on his 79th birthday.

The post Putin Speaks to Trump, Condemns Israel’s Strikes on Iran, Kremlin Says first appeared on Algemeiner.com.

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Sunday’s US-Iran Nuclear Talks Cancelled, Oman Says

FILE PHOTO: Oman’s Foreign Minister Sayyid Badr bin Hamad bin Hamood Albusaidi attends a meeting with Russia’s Foreign Minister Sergei Lavrov in Moscow, Russia July 11, 2023. Photo: Natalia Kolesnikova/Pool via REUTERS/File Photo

The latest round of US-Iran nuclear talks scheduled for Sunday in Muscat will not take place, Omani Foreign Minister Badr Albusaidi said on X on Saturday. Oman has been mediating the talks.

Albusaidi’s statement came a day after Israel launched a sweeping air offensive against Iran, killing commanders and scientists and bombing nuclear sites in a stated bid to stop it building an atomic weapon.

A senior official of US President Donald Trump’s administration, speaking on condition of anonymity, confirmed Sunday’s talks had been cancelled.

Washington, however, remained committed to the negotiations and hoped “the Iranians will come to the table soon,” the official said.

The post Sunday’s US-Iran Nuclear Talks Cancelled, Oman Says first appeared on Algemeiner.com.

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Iran Says Talks with US ‘Meaningless’ After Israel Attack, But Yet to Decide on Attending

USA and Iranian flags are seen in this illustration taken, Sept. 8, 2022. Photo: REUTERS/Dado Ruvic/Illustration

Iran said the dialogue with the US over Tehran’s nuclear program is “meaningless” after Israel’s biggest-ever military strike against its longstanding enemy, but said it is yet to decide on whether to attend planned talks on Sunday.

“The other side (the US) acted in a way that makes dialogue meaningless. You cannot claim to negotiate and at the same time divide work by allowing the Zionist regime (Israel) to target Iran’s territory,” state media on Saturday quoted foreign ministry spokesperson Esmaeil Baghaei as saying.

“It is still unclear what decision we will make on Sunday in this regard,” Baghaei was quoted as saying.

He said Israel “succeeded in influencing” the diplomatic process and the Israeli attack would not have happened without Washington’s permission, accusing Washington of supporting the attack.

Iran earlier accused the US of being complicit in Israel’s attacks, but Washington denied the allegation and told Tehran at the United Nations Security Council that it would be “wise” to negotiate over its nuclear program.

The sixth round of US-Iran nuclear talks was set to be held on Sunday in Muscat, but it was unclear whether it would go ahead after the Israeli strikes.

Iran denies that its uranium enrichment program is for anything other than civilian purposes, rejecting Israeli allegations that it is secretly developing nuclear weapons.

US President Donald Trump told Reuters that he and his team had known the Israeli attacks were coming but they still saw room for an accord.

The post Iran Says Talks with US ‘Meaningless’ After Israel Attack, But Yet to Decide on Attending first appeared on Algemeiner.com.

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